Bevy of Questions Awaits Buffett at Berkshire Meeting

Shareholders heading to Omaha, Neb. for the Berkshire Hathaway annual meeting this weekend should be spoiled for choice in terms of juicy questions to throw at Warren Buffett, perhaps the world’s most celebrated stock picker.

Here are some of the things to watch for at this year’s meeting. See full coverage Saturday on WSJ.com

Goldman Sachs:

Warren Buffett is expected to comment at length on Goldman Sachs Group Inc., the embattled bank charged with fraud by the Securities and Exchange Commission and the subject of a criminal investigation by the Department of Justice. Several Goldman executives, including CEO Lloyd Blankfein, were grilled before a Congressional panel this week for their actions related to shaky mortgage securities the bank peddled before the credit crisis. Goldman denies the charges, but outraged Congressman seemed unconvinced. Berkshire Vice Chairman Charlie Munger recently told the Wall Street Journal that Goldman was engaged in “socially undesirable” activities. Look to see whether Mr. Buffett agrees with his cantankerous sidekick or offers up a defense of Goldman. See this WSJ story for more.

Derivatives:

At last year’s meeting, Mr. Buffett had to defend several huge derivative contracts that had plunged in value during the credit crisis. The deals, essentially insurance contracts on several stock indexes around the world, helped cause Berkshire’s book-value per share decline in 2008. This year, Mr. Buffett is facing a new headache tied to derivatives: A Congressional proposal that would retroactively force Berkshire and other companies to put up collateral against the contracts. Billions could be at stake. Berkshire rarely has to put up collateral against such contracts due to its solid financial strength. The proposal has been subject to fierce haggling behind the scenes in Washington, and Nebraska Senator Ben Nelson has pushed to get it stripped from the bill. With all of this going on, investors will listen closely to Mr. Buffett any time he utters the word “derivatives.” One big question: Will Mr. Buffett unwind the deals if the proposal sticks?

Burlington Northern:

Expect a few railroad gags. Mr. Buffett is known for hamming it up at the annual meeting, especially in a lengthy video broadcast before the question and answer session begins. Past videos have pitted the Oracle against elite athletes such as Tiger Woods and LeBron James. Mr. Buffett has long had a fascination with trains, and now he owns one of the world’s biggest: Burlington Northern Santa Fe Corp. But there are sure to be some meaty discussions on Mr. Buffett’s views about the prospects for the railroad biz. While some have wondered why Mr. Buffett has purchased a large, capital intensive business that isn’t likely to grow at a rapid pace, others say the purchase of Burlington was a savvy move that will reap rewards for years. It will be interesting to hear Mr. Buffett opine on the prospects for the rails.

Succession Plans:

Every year the 79-year-old Mr. Buffett is asked whether he will name his successor–and every year he passes. Who knows, maybe this year he’ll actually drop the bomb. MidAmerican Energy Holdings Co. CEO David Sokol. But don’t hold your breath. Mr. Buffett loves running Berkshire Hathaway and he shows no sign of slowing down. Case in point: the $26 billion Burlington deal, the biggest purchase in his long career.

New Blood

In February, Berkshire was added to the S&P 500-stock index, giving millions of American for the first time the chance to own a piece of the Oracle. The addition was largely a result of Mr. Buffett’s decision to split the firm’s Baby B shares as part of the Burlington Northern deal. The upshot: A whole new coterie of Berkshire investors may make the pilgrimage to Omaha this year. In 2009, 35,000 people showed up at the Qwest Center. Many more and Mr. Buffett may have to move to a new venue–the TD Ameritrade Park Omaha is slated for completion by April next year. Perhaps the next annual meeting will be held outdoors?

Comments (1 of 1)

Thanks for reading MarketBeat. We would like to direct you to MoneyBeat, the Wall Street Journal’s brand new global blog. MoneyBeat unites MarketBeat, The Source, Overheard and all the Deal Journal blogs, bringing together all the market, M&A, IPO and hedge-fund news from those blogs into a 24-hour hub for finance news. Check it out and let us know what you think at moneyblog@wsj.com.

About MarketBeat

MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what’s happening in the markets. Lead writers Paul Vigna and Steven Russolillo spearhead the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to paul.vigna@wsj.com or steven.russolillo@wsj.com.